House Rent Allowance is one of the most important and significant part on the salary of Central Government Employees.

It is paid to Central Government Employees including Railway Employees and Defence Personnel who do not avail Quarters facility provided by Government.

Prior to implementation of 7th Pay Commission it was paid at rates of 10%, 20% and 30% on basic pay (pay in pay band plus grade pay). On implementation of 7th Pay Commission HRA is paid on the 7th CPC basic pay provided in the relevant vertical index and Horizontal Level applicable at the rates of 8%, 16% and 24% depending upon the Classification of Cities for the purpose of HRA.

Classification of Cities/Towns

Rate of House Rent Allowance per month as a percentage of Basic Pay only

X

24%

Y

16%

Z

8%

Other major Changes in HRA after 7th Pay Commission:

The rates of HRA will not be less than Rs.5400/-, 3600/- & 1800/- at X, Y & Z class cities respectively. This safeguard has been given by Govt to ensure that Employees at lower levels of pay get 10%, 20% and 30% HRA in the 7th CPC Pay Also. In other words, Govt has retained 30%, 20% and 10% for Central Government Employees in the first 10 slabs in Pay Level 1, first 4 slabs in Pay Level 2 and one slab in Pay level 3 in Pay Matrix.

Checkout following link for Finance Ministry orders for revised HRA on implementation of 7th pay Commission and detailed information on classification cities for the purpose of HRA.

Based on the following rough estimate in respect of Pay Band 2 with Grade Pay of Rs. 5400, HRA on the 7th CPC revised pay of an employee is around 100% more than HRA drawn by him / her prior to implementation of 7th Pay Commission if DA merger (125%) effected is not taken in to account. Howerver, DA merger is taken in to account, revised HRA is lesser to an extent of around 10% compared to Old HRA.

Calculation of HRA for Pay Band 2 with Grade Pay of Rs. 5400 (Illustrative Purpose)

basic pay

HRA Rate

Increase in HRA (DA merger not taken in to account)

Basic Pay + DA (125% as on 1st Jan 2016)

Increase in HRA (DA merger taken in to account)

before 7CPC

Rs. 23890+5400

20%

Rs. 5858

65903

Rs. 13181

after 7CPC

Rs 75,600

16%

Rs. 12,044

75600

Rs. 12,044

Difference

Rs. 6,186 (Increase of 105%)

(-) Rs. 1137 (Decrease of 9.4%)

What if both and husband and wife are working in Central Government and posted at same station?

HRA will be paid to both husband and wife even if they work in the same station and did not avail Government Quarters. Even if one of them avails the Government residence in the same station where the other spouse is working, he/she will not be entitled for HRA.